KKR and Williams to buy Discovery Midstream for $1.2bn

KKR’s energy and infrastructure funds have partnered with Williams to buy a natural gas processing services company from TPG Growth for around $1.2bn (€1.03bn).

The US investment firm said it has entered into an agreement to acquire Discovery Midstream through the newly formed joint venture with the listed natural gas infrastructure provider.

KKR will hold an initial 60% stake in the joint venture and Williams will hold an initial 40% stake.

KKR said Williams has agreed to increase its ownership to 50%.

Founded in 2015 and based in Dallas, Texas, Discovery operates in the southern portion of Colorado’s Denver-Julesburg Basin.

Discovery’s assets include a 60m cubic feet per day gas processing plant with an additional 200m cubic feet per day plant that is fully permitted and under construction. It is expected to be in service by the end of 2018.

James Cunningham, a managing director on KKR’s energy and infrastructure team, said: “The Discovery team has built a strong gathering and processing infrastructure footprint to service growing production in the DJ Basin and Williams is well known as a safe and reliable operator of large-scale G&P systems in the Rockies.

“This fits well with our long-term focus on partnering with top-tier operators who prioritize operational excellence and stakeholder engagement when working on premier North American midstream infrastructure assets.”

Alan Armstrong, Williams’ president and CEO, said: “As one of the premier providers of large-scale energy infrastructure with operations across the natural gas value chain, we look forward to serving the Discovery customers in this growing basin with our industry-leading midstream services and working with KKR, whose energy and infrastructure investments and strategic partnerships are well-known and highly regarded.”

Steven Meisel, the CEO of Discovery, said: “We’re thrilled to be partnering with KKR and Williams, two leading institutions that will further support our growth in the DJ Basin.

“We look forward to continuing to safely deliver for our customers and the community alongside our new partners.”

The deal is expected to close in the current quarter of the year, subject to customary conditions.